Trend Pulse Channel Strategy

Overview

Trend Pulse Channel Strategy is a long-only trend-following breakout strategy built around an adaptive multi-pole smoothing filter and a volatility-adjusted price channel.
The strategy is designed to participate in sustained directional moves by entering only when price confirms momentum strength beyond a dynamic upper boundary, while avoiding mean-reversion and low-quality consolidation phases.

This script is published as a strategy and includes realistic backtesting assumptions for position sizing, commissions, and slippage.

Core Concept

At the heart of the strategy is a multi-pole adaptive EMA-based filter, inspired by advanced digital signal smoothing techniques.
Using multiple poles allows the filter to reduce noise while preserving responsiveness to genuine trend changes.

To adapt the channel width to changing market conditions, the strategy applies the same filtering logic to True Range, producing a volatility-aware envelope rather than a static or fixed-percentage band.

This combination allows the strategy to:

Track directional bias using a smoothed central filter

Adjust channel width dynamically based on market volatility

Trigger entries only when price expansion confirms trend strength

Entry Logic

A long position is opened when:

Price crosses above the upper channel band

The signal occurs within the user-defined date range

This condition represents a volatility-confirmed breakout aligned with the prevailing directional filter.

Exit Logic

The long position is closed when:

Price crosses back below the upper band

This exit logic aims to stay in trending moves while exiting when upside momentum weakens.

The strategy does not open short positions by design.

Inputs and Defaults

The default inputs are selected to balance smoothness, responsiveness, and stability:

Source (HLC3): Reduces single-price noise by averaging high, low, and close

Period (144): Defines the primary smoothing horizon of the adaptive filter

Poles (4): Controls the smoothness vs. responsiveness trade-off

Range Multiplier (1.414): Scales the volatility envelope using filtered True Range

Reduced Lag (optional): Applies lag compensation to improve responsiveness

Fast Response (optional): Blends multi-pole and single-pole filters for quicker reaction at the cost of smoothness

All inputs are fully configurable and can be adjusted to suit different instruments and timeframes.

Risk Management & Position Sizing

The strategy uses:

Position size: 10% of equity per trade

No pyramiding

Long positions only

This sizing approach is intended to reflect sustainable risk exposure rather than aggressive capital deployment. Users may further adjust position size based on their own risk tolerance.

Backtesting Assumptions

The strategy is tested using:

Initial capital: 10,000

Commission: 0.1%

Slippage: 1 tick

Order fill model: Standard OHLC

These settings are chosen to provide more realistic performance estimates compared to idealized backtests.

This strategy is best suited for:

Trend-oriented markets

Higher timeframes where breakouts are more reliable

Users seeking systematic trend participation rather than frequent scalping

In sideways or range-bound market conditions, price may cross the channel boundaries frequently.
This can result in a higher number of entry and exit signals that do not develop into sustained trends.

For this reason, the strategy should be used with an understanding of basic technical analysis concepts, including market structure, trend identification, and consolidation behavior.
It is intended as a decision-support tool, not a standalone trading system.

Users—whether beginners or experienced traders—should avoid relying solely on this strategy and are encouraged to combine it with broader market context and additional analysis methods.

Disclaimer

This script is provided for educational and analytical purposes only. It does not constitute financial advice. Past performance does not guarantee future results.